Difference Between EPF and EPS

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What is the EPF Scheme?

EPF and EPS – The government designed the Employees’ Provident Fund (EPF) scheme to help employees build a retirement corpus. The Employees’ Provident Fund Organisation (EPFO) manages the scheme, which applies to organizations with 20 or more employees. Under the scheme, both the employer and employee contribute 12% of the employee’s salary (basic + DA) every month.

Key Features of EPF:

Mandatory contribution: Both employer and employee contribute 12% of the basic salary.
Interest on savings: The EPF balance earns interest at a rate decided by the EPFO annually.
Withdrawal facility: Employees can withdraw funds upon retirement, resignation, or specific needs like home loan repayment, marriage, or medical emergencies.
Tax benefits: Contributions to the EPF are eligible for deductions under Section 80C of the Income Tax Act.
Universal Account Number (UAN): The EPF account is linked to a UAN, which helps employees track and manage their funds online.

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What is the EPS?

The government designed the Employees’ Pension Scheme (EPS) to provide financial security to employees after retirement. The EPFO manages the scheme, and employers fund it through their contributions.

Key Features of EPS:

Employer’s contribution: Of the 12% employer contribution to Employee Provident Fund, 8.33% is allocated to EPS (up to a maximum of Rs. 1,250 per month).
Pension eligibility: Employees become eligible for a pension after 10 years of continuous service.
Minimum pension amount: The scheme provides a minimum pension of Rs. 1,000 per month.
Early withdrawal: Employees can withdraw a portion of the pension corpus if they have not completed 10 years of service.
No interest accrual: Unlike EPF, EPS does not earn any interest over time.

EPS vs EPF – Difference Between EPS and EPF

Feature	EPF (Employees’ Provident Fund)	EPS (Employees’ Pension Scheme)
Purpose	Retirement savings scheme	Pension scheme for financial security after retirement
Contribution	Employee: 12% of basic salary; Employer: 12% of basic salary	Employer: 8.33% of basic salary (up to Rs. 1,250 per month)
Managed By	Employees’ Provident Fund Organisation (EPFO)	Employees’ Provident Fund Organisation (EPFO)
Interest Earnings	Earns interest annually	No interest earnings
Withdrawal Conditions	Can be withdrawn fully or partially before retirement	Can only be withdrawn if the service is less than 10 years
Tax Benefits	Eligible for tax deductions under Section 80C	Pension is taxable upon withdrawal
Pension Benefits	No pension benefits	Provides a pension post-retirement
UAN Linkage	Yes	Yes

EPF vs EPS Schemes – How They Work Together

EPF and EPS work together and complement each other to provide financial security for employees after retirement. While EPF focuses on savings with interest earnings, EPS ensures a lifelong pension to those who have completed 10 years of service.

EPF Balance and EPS Account Management

Employees can check their EPF balance through the EPFO portal, UMANG app, or by sending an SMS.
The EPS account is not separate; it is automatically linked to the EPF account.

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Conclusion

The government offers the EPF and EPS schemes as essential retirement benefits to salaried employees. While EPF helps employees accumulate a retirement corpus with interest earnings, EPS ensures a steady pension after retirement. Employees should be aware of their contributions, withdrawal options, and pension benefits to make informed financial decisions.

Frequently Asked Questions

Can I withdraw my EPS balance before retirement?

If you have completed less than 10 years of service, you can withdraw the EPS balance by submitting Form 10C. Otherwise, the amount remains in the EPS account until you reach 58 years.

What is the interest rate on EPS?

EPS does not earn any interest as it is meant solely for pension disbursement after retirement.

How is the pension amount calculated under EPS?

The EPS pension amount is calculated using the formula: (Pensionable Salary × Years of Service) / 70.</span>&amp;amp;amp;lt;/p>

Can I contribute more than 8.33% to EPS?

No, the maximum contribution to EPS is capped at 8.33% of Rs. 15,000 (Rs. 1,250 per month).

What happens to my EPF balance if I change jobs?

Your EPF balance is transferred to your new employer’s account using the Universal Account Number (UAN).&amp;amp;amp;lt;/span&gt;</span>

Can I withdraw EPF before retirement?

Yes, EPF can be partially or fully withdrawn before retirement for specific reasons like medical emergencies, home loan repayment, and higher education.

Is the EPS pension taxable?

Yes, pension received under EPS is taxable as per the individual’s income tax slab.

How can I check my EPF and EPS balance?

You can check your EPF balance through the EPFO portal, UMANG app, SMS, or by calling EPFO customer care. EPS details are available through the EPF account statement.

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